When you’re in the consulting or coaching industry, it can be difficult to figure out what to charge for your services. How do you make sure your skills aren’t undervalued while still being able to compete with other prices?
Since your clients aren’t buying a tangible product, it seems even harder to put a price on what you’re offering. This can also skew your clients’ perception of the value they’re getting. Since many in the consulting or coaching business don’t advertise their prices right up front, it’s even more difficult to understand average consulting rates so you can see where you stand compared to the consulting rates of your competition. We’ve gathered the average consulting rates by industry from across the web in our infographic below to make things easier!
If you’re feeling frustrated by all the options, we’ll also walk you through common fee structures and how to get started with calculating your own rates.
There’s no hard and fast rule on how you should charge for your consulting or coaching, but most consultants and coaches have a pricing model for their work or projects. There are a few different fee structures that are most common:
Project-based rate: Billing a fixed rate or fee per project completed.
Hourly rate: Billing by the number of hours worked.
Performance-based rate: Billing based on the results of your work or project.
Combination rate: Billing a fixed rate for the project and hours spent on the project.
Value-based rate: Billing based on the value and ROI(return on investment) you create.
Depending on the client or project, you may adjust your structure or choose a different model to charge entirely. You don’t have to pick just one model to work with – it’s fine to switch it up as long as both you and your client are comfortable with the pricing and you’re transparent about any costs.
Which one should you go with? Our infographic below tells you the most used option consultants go for, as well as which one is trending on the rise!
Below, we’ve put together an infographic of average consulting rates by industry in 2020, along with some interesting statistics about consultants and coaches like you. How do you stack up against your peers when it comes to consulting rates?
More to consider
When it comes to figuring out your own rates, there are a lot of other factors to consider! Because the average consulting rate by industry can vary widely, understanding the different pieces that go into choosing a way to charge for your services will make deciding on your own pricing model much simpler.
The market rate is the average price or range of pricing that clients generally pay for your service. Market rates aren’t an exact science and you don’t have to limit yourself within a certain price range, but examining the average will help you get a picture of what clients’ expectations are and what your competition may be charging for similar services in your area and beyond. Consider the average market rate in your industry as a small factor in your own pricing. You may be far more experienced than others in the market, meaning you can double the market rate for your services. Conversely, you may be just starting out, and while you may have less experience, you can charge much lower prices – making you much more attractive to new clients.
Location, location, location! Where you live and do your work is another important factor in what you charge for your services. Not surprisingly, Consultants in dense, urban areas charge more for their services, while those living in less populated areas will charge a lower price. What if you do remote consulting, working exclusively online? Some clients may prefer you to be on-site, but working remotely can reduce costs for you, and therefore, your clients. Think about the type of ideal clients you’re looking for and where they are – what prices are they more likely to expect?
Time to do your homework! Knowing what your competitors are up to is crucial in deciding on your pricing. What are they offering and for how much? Their experience, like special skills and certifications, could be impacting their prices. What do the reviews say? Maybe their prices are low but their customer service is rated poorly. Are they offering something different than you are? Or are you offering something unique that only you can provide? If you are, this can be your unique selling point and allow you to charge more based on value and scarcity. Some consultants will mystery shop their competitors to get an idea of pricing or join groups with other consultants and coaches to have open discussions online. It’s good practice to check-in often on your competitors and not just when you’re first deciding on your pricing model, especially if your industry evolves frequently.
If you don’t know how to negotiate, it’s time to learn. You can expect to negotiate your rates often, so it’s important to remember that negotiating your rate isn’t a matter of winning or losing. Both you and your client want to have your needs met. Establishing a long term relationship with your clients is crucial – you want them to keep coming back for your services or referring you to others. If negotiating with you is impossible, they will eventually walk away, even if you “win” the first round. Try to consider the rate you charge as a starting off point that will begin a conversation. Some clients will be worth lowering your prices for because of the repeat business they’ll create, referrals they can provide, or because they’re a known brand that can help you attract more leads. While it’s very important to be flexible, you should also remember to know your value and be willing to walk away if you can’t reach an agreement. Do your due diligence when entering into any kind of business relationship, and don’t be afraid to seek the advice of a professional!
With these factors in mind, you can start building the framework of the consulting rate you’d like to charge. Using a formula or fee calculator like the examples listed below is a good jumping-off point.
Consulting fee calculators
There are several different ways to calculate what you’re going to charge, especially when you’re factoring intangible aspects like experiences, skills, and expertise. These calculators are a great way to start off figuring out your own consulting rates.
The consulting fees calculator from Consulting Success provides a great starting point to help you figure out how much much to charge in order to make the amount of money you want each day, month, and year.
This article, Consulting Fees and Rates – How Much Should I Charge? from Consulting.com walks you through formulas you can use to calculate your fees based on the pricing models you’ll use.
Like a lot of things in a small business, choosing your consulting rates is a work in progress. You can always adjust your rates over time based on demand, the market, and what you and your clients feel comfortable with. Consulting rates are just one piece of the puzzle – if you want to learn how to bring in more clients, check out How To Get Clients for Your Consulting or Coaching Business with This Influencing Technique and some great tips for marketing your consulting business in our YouTube video below!
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